Answer:
The correct answer for option (a) is $1.15 and for option (b) is $1.33.
Explanation:
According to the scenario, the given data are as follows:
Present value (PV) = $1
Rate of interest (R) = 1.18% per month
Time period (for option a) (t1)= 12 months
Time period ( for option b) (t2)= 24 months
So, we can calculate the future value by using following formula:
FV = PV × ( 1 + R )^t
(a). By putting value in the formula:
FV = $1 ( 1 + 0.0118)^12
= $1 × 1.1511610877
= $1.15
FV = PV × ( 1 + R )^t
(b). By putting value in the formula:
FV = $1 ( 1 + 0.0118)^24
= $1 × 1.32517184983
= $1.33
Answer and Explanation:
The computation is shown below:
Fixed cost is
= $500,000 + $1,000,000
= $1,500,000
And, the marginal cost is
= $0.25 + $0.10
= $0.35 per paer
Now
as we know that
AFC = FC ÷ Q
Now for At 1,000,000 papers,
AFC is
= 1,500,000 ÷ 1,000,000
= $1.50/mo
At 800,000
, it would be
AFC = 1,500,000 ÷ 800,000
= $1.875/mo
MC = $0.35 per paper and the same is not changed
Now for break even, the average total cost is
ATC = AFC + AVC
ATC = FC ÷ Q + VC ÷ Q
VC = MC × Q
ATC = FC ÷ Q + MC
ATC = FC ÷ Q + 0.35
At Q = 1,000,000,
ATC = 1.50 + 0.35
ATC = $1.85
At Q = 800,000
, it would be
ATC = 1.875 + 0.35
= $2.225
As it can be seen that
The AFC changes from 1.50 to 1.875 which shows an increment of 0.375.
The MC remains constant or same at 0.35 as the printing and delivery costs per paper are remain same
And, The minimum amount that we must charge to break even rises i.e. from 1.85 to 2.225. That is a rise of 0.375
<span>The economy was slowing, but prices were rising, signifying the potential for stagflation.
</span>Stagflation is term used in economics to denote economic situation characterized with high unemployment, rising prices, economic growth. This situation occurs when the overall price level rises rapidly. In our case, <span>"the price of eggs was up 40% and milk was up 26%., which means that the prices raised rapidly.</span>